The US has slapped more sanctions on businesses with dealings in Venezuela, this time aiming for Russia’s third largest company, Rosneft.
The US has increased pressure on Venezuela by blacklisting a subsidiary of Russia’s state-controlled Rosneft for brokering the sale and transport of Venezuelan oil.
According to the US Department of the Treasury, Rosneft’s subsidiary, Rosneft Trading, was involved in negotiating for and shipping millions of barrels of oil from Venezuela’s state-owned oil and gas company between August 2019 and January 2020.
“The United States is determined to prevent the looting of Venezuela’s oil assets by the corrupt Maduro regime,” said Treasury Secretary Steven Mnuchin.
Rosneft Trading’s parent company Rosneft, which is the third largest company in Russia, responded by calling the sanctions “illegal, unjustified, and an act of legal abuse.”
According to the company, its activities in Venezuela are based on previous agreements made before the imposition of sanctions, and its continued activity there is based on ensuring returns on previously made investments.
“Thus, the company does not violate the illegal restrictions imposed by the US, which has been repeatedly recognized by the American regulator,” it said, adding that it will be considering its legal options.
A Rosneft executive said on Wednesday (February 19) that the company will continue to do business in Venezuela in order to secure repayments, which are being made in the form of oil shipments to pay down US$6.5 billion in loans made to the country by Rosneft between 2014 and 2018.
For its part, Venezuelan state-run oil and gas company PDVSA responded by rejecting Washington’s “hegemonic control of the global oil market,” calling the US an “economic hitman” guilty of carrying out “economic discrimination” and “hatred” against the country.
The US has been slapping sanctions on Venezuela for years, as it considers the government of Nicolas Maduro to be illegitimate.
The US, along with its allies, recognizes Venezuelan opposition leader Juan Guaido as acting president of the oil-producing country. The US leads efforts to pressure the Maduro government to hold new elections by sanctioning Venezuelan companies and politicians and all those who do business there.
Venezuela even went as far as reaching out to oil cartel OPEC for help fighting back against the the US’ actions; OPEC declined to make any formal statements, arguing it is focused on policy, not politics.
Support for Maduro comes mainly from China, Cuba and, of course, Russia.
As the arrangement between PDVSA and Rosneft Trading is repaid in oil, it’s uncertain how the sanctions against the Russian company will affect the Venezuelan government.
According to reporting by the Financial Times, because the sanctions apply to a Rosneft subsidiary and not the company itself, the Russian giant is unlikely to be greatly affected by the sanctions.
The company had managed to make back all losses on the Moscow market within less than 24 hours of the sanctions being announced.
As the third largest Russian company and an international oil giant, Rosneft accounts for 6 percent of global oil production.
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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.